Prabhudas Lilladher's research report on HDFC Bank
HDFCB saw a mixed quarter. While core PAT at Rs115.4bn was 3.7% short of PLe due to higher opex, asset quality surprised positively with lower GNPA led by lesser slippages, despite Q1 being usually weak. Loan growth was softer at 0.5% QoQ driven by IBPC sell-down since bank would like to manage its PSL requirement in a calibrated manner. Quality of growth was superior as credit offtake QoQ was led by retail and CRB. Bank sounded confident of achieving a 18% YoY loan growth (merged) over medium term though we are factoring 16% due to likely deposit need. Benign asset quality environment may keep opex elevated in near term and for FY24/25E we raise opex by 5% but reduce provisions by 15/9bps, which will not change PAT materially. NII and core PPoP trend compared to peers would be keenly watched.
Outlook
We maintain multiple at 3.0x on FY25E core ABV and TP at Rs2,025. Retain ‘BUY’.
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